Sound investment

[unixronin]

This article, which specifically discusses Goldman Sachs' defense of the charges against it, reveals what I consider to be a strong element of what's wrong with the financial markets of today:  It's considered OK to make bad investments, because you can always bet against them or find other ways of pushing the risk off onto someone else.

Wouldn't it be better to research potential investments more thoroughly and only invest in the ones that seem sound?

Of course, when you can't trust the bond ratings, how do you know?

Well, then perhaps it might be better to just stay away from financial derivatives altogether?

Comments

[unixronin.livejournal.com]

And I have no problem with that.

What I have a problem with is the invention of ever more complex, ever more abstract derivatives to construct house-of-cards financial structures whose whole purpose is to create imaginary money that exists only on paper, backed with imaginary money that exists only on paper, backed with imaginary money that exists only on paper, backed with imaginary money that exists only on paper, backed with ....

It's a recipe for disaster. As we've just seen. Especially when you add into this the idea that all financial risk can be defined and repackaged away and made Somebody Else's Problem. And ESPECIALLY when you add in the idea that the companies doing this are "too important to fail", and therefore can afford to lose their financial gambles because they know that WHEN, not if, it all goes pear-shaped, they'll be bailed out with other people's money.